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1/31/15

Yesterday morning your humble scribe floated an idea that has the charty brigade up in arms; that the ratio between gold and copper can stay where it is now, even after a very big hike in the last few weeks.

...until some twentysomething wannabe hack at The Huffington Post has taken one of your blog posts, re-worked it and published it under their own name. If so, then apparently IKN has arrived. After all these years, too.

1/30/15

I really don't see the point in owning this. Endeavour Silver (EDR.to) (EXK) announced its new reserves/resource estimates plus its 2015 guidance in this NR yesterday, which (unusually) came with a ConfCall (listen to it here) and after doing all the number thing and listening carefully to the company's arguments (twice, replay this morning) I'm left with the impression that the only people who can benefit from the existence of EDR are the people who work there.

Now that's not such a bad thing (aside from the overstuffed paypackets of Brad Cooke and the assembled directors) as I'm all for providing gainful employment to Latin Americans. But why should a shareholder own a company that bases its reserves/resources on $18/oz silver and $1,260/oz gold when it's already shown that it can't make a profit on those numbers? I mean, it may see cost reductions in the pipeline but the hard fact is that in 3q14, when its realized price for both metals was higher than that (U$18.78/oz Ag and U$1,278/oz Au) it returned an operating loss of $3.6m and a net loss of $11.386m for the quarter.

Also, when it comes to the future Brad Cooke told us on the CC that the company "had to crack the nut" on El Cubo and I was "Whaaaaat?", because this is the same nut they promised to crack in 2013. And 2014. This company is pure jam tomorrow, but when it comes to execution it never lives up to the sweet talk.

Seriously, what's the point in owning a loss-making silver company at the current price deck? In fact, even if it breaks even, even if it runs a modest profit, it still has a crapload of financial debt on its books (oh...they're promising to get that down to $25m by end 2q15...we'll see). And that's the bottom line here; EDR and many other silvercos in Mexico are running to stand still, with all that mining and production and busy ness that shows nothing for shareholders. Nothing at all.

The website of husband and wife team Kristen Henning and Tom Bartel has been a personal favourite for quite a while but it has to be stated, over the last year or so their work has gone from very good to absolute top class world standard travel journalism. What the thrust behind this quality jump might be I do not know, but these days anything that pops up on my RSS from Travel Past 50 gets immediate eyeballs, the two posts today no exception.

This from Kristen, another reporton their recent stay in Florence/Firenze, Italy. Tons of info, plus insight and tips on how to get the best out of your visit there. And the photos.

On the subject, yesterday in Chile we had the presentation of the Cochilco Market Tendencies report, with Cochilco being the world's number one copper producer country's copper beancounter people and the Market Tendencies report their main annual thingy, which invariably comes at the end of January each year.

Cochilco forecasts copper to sell at an average of $2.85/lb this year, and $2.80/lb in 2016. That first number is down from their previous guess of $3/lb in 2015. Here's a chart with numbers on it:

So even if their guesses for the next two years are correct, which means copper recovers somewhat from its present level, you can easily see the type of price drop faced by the industry in that graphic.

A whole range of chartists currently insisting that copper "cannot stay this low" and it's basically because of this chart. Which they did not predict and therefore causes them psychological pain. Because, we're told "this ratio can't stay this way" and "something's got to give" and mutterings of that ilk.

Yes it can stay up there. Copper can sell at $2.50/lb for the rest of the year and gold at $1.3k/oz or so (or copper at $2.30 and gold $1.2k., or $2.70/lb and $1.4k. etc). Forget the stupid squiggly line, tell me why those two components cannot possibly remain steady at their new price brackets.

One thing's for sure; whatever gold and copper do in 2015, it won't be because some randomwalk charty dude who makes a living by selling his snake oil feels the ratio chart is esthetically displeasing.

1) You do not talk about Fight Club.
2) You DO NOT talk about Fight Club.
3) You DO NOT talk about Fight Club when IKN is listening.

According to eyewitnesses and assorted gossips who have busily exchanged with IKN this morning, here's the apparent best-fit of what went down between Daniel Earle of TD Sec and Clive Johnson of B2Gold (BTG) (BTO.to). The 10-20 was the bar at Modus Ristorante, in high falutin' downtown financial district Toronto. Clive Johnson, CEO and head honcho of B2Gold, found himself chatting pleasantly to one of the young and attractive waitresses there after having paid and, significantly, tipped pretty heavily. At some point Daniel Earle, who is by nature a mild mannered and relaxed kind of person, quipped to Clive in what was supposed to be a humourous manner (and I'm going to put this in speech marks even though it might not be the exact quote word for word, because if it wasn't it was darned close), "You know she's only talking to you because of your wallet."

Clive took this the wrong way and it all went downhill quickly. After replying with "What the f___ did you say?"* the CEO of the multi-billion dollar mining company B2Gold took it upon himself to punch Earle in the face. He then paused and punched him a second time, again in the face.

Daniel Earle then punched Johnson once, in the face, and Clive went down. That was the end of the fight.

The next day Clive was seen marketing in the meeting rooms and by-ways of Toronto with a well-formed black eye and broken glasses.

And that's your lot, except for three footnotes (and one of them really is a footnote).

a) Clive Johnson has been telling others roughly the same story, except for one small detail: he says that Daniel Earle threw the first punch. As we understand Modus has closed-circuit TV cameras and recorded the episode, if things ever come to a more formal head we'll get to find out which version is closest to the truth. For what it's worth and from what I've heard today, the most doubtful version of the story is the one being put forward by CEO Johnson.

b) Clive Johnson has previous form with this kind of behaviour and it tends to be at evening social occasions when...errrr...the wine floweth. Isn't it about time somebody in a position of executive power at BTO took him aside and had a quiet little chat about his habits?

c) And now the foot footnote. By some sort of bizarre coincidence, one of the previous occasions when Clive Johnson went tired and emotional (as they say in Private Eye) was last year at a mining bash, when he almost came to blows with John McCluskey of Alamos Gold. Now McCluskey may not be everybody's cup of tea as a person, but he's also known to be disabled with his leg problem. So maybe if Johnson can't calm down and be a normal person in future, he should at least try picking on somebody with four limbs and make it a fair fight.

*The F-word has letters removed because some brokerages have complained they can't read IKN posts due to in-house profanity filters. Normally I'd use it without caring a jot, as you know.PS: There has been a very slight edit made ot this post, regarding personal information on a minor matter that's not particularly connected to the main story. So if one part of the text seems not to make total sense, that's why. It's no biggie either way

After running this humble corner of cyberspace for less than half that time and even with a tiny fraction of the readership Sullivan has and fully deserves, I fully vouch for the reasons he gives for walking away. IKN salutes you, sir. Andrew Sullivan, the master blogger of them all.

As of today, Pacific Rubiales (PRE.to) is a sub-$1Bn market cap company. Canadian dollars at that.

And the reason, aside from the obvious about the oil drop, is that the word inside Colombia's financial zone is that Ecopetrol is indeed going to take back its Rubiales field next year instead of continuing the JV with PRE.to, as is ECO's right under the deal. And that means PRE loses its cheapest and most important production field. And that means in 2016, its costs per barrel shoot higher than anything it sketches in its current 2015 guidance. And that means it won't have the moolah to service correctly this table of wonderful money numbers*.

And that means that if oil prices don't pop back up, this show is over.

Bottom line, this company isn't an investment any longer, it's a gamble.

Daniel Earle is still employed by TD Sec and has not been let go, contrary to an incorrect rumour going around on this Thursday morning. The rumour is wrong, IKN has the straight and official dope. This is good.

Also, Clive Johnson is still an employee of B2Gold and has not been fired as yet, according to our latest information. However Clive, IKN and its burgeoning mailbox can confirm that without a shadow of a doubt you're not as popular in the mining world as you think you are. And you owe apologies, too.

UPDATE: Your humble scribe has 95% of the dirt on what went down. Expect a salacious post later.

1/28/15

Clive Johnson, CEO of B2Gold (BTO.to) (BTG) and Daniel Earle, sell side analyst at TD Sec, got into a fistfight last night and according to reports picked up at IKN Nerve Centre, The Clive came off second best and today has a black eye and a pair of broken glasses for his troubles.

Red wine was a third party in the fracas.

No news on Daniel Earle's employment status. Yet.

UPDATE: Your author reaches out to Daniel Earle for his version of the events, but bizarrely and strangely...

You''ll notice immediately how your average retail market player feels it necessary to apologize to the members of his psychological support group (you may recognize its alternative title more readily, "Bullboard of Heavily Promoted And Deeply Underwater Mining Stock") because the author in question is "habitually negative".

Here's a suggestion: Instead of "habitually negative", let's go for "has firm grasp on reality when it comes to the junior mining world". People, have a good hard stare at this chart:

That's five years...AH SAID FIVE YEARS...of the TSX Venture Exchange Index versus the S&P500. And in that five years yes indeed madam and yes indeed sir, your author and this humble corner of cyberspace has been "habitually negative" about the junior mining sector, the companies it houses, the people therein. I mean, got an idea as to why that might be yet? Meanwhile...

Mouthbreather central websites run by and for the corrupt rich folk in Vancouver (yes CEO CA that's you, but sadly you're not the only ones out there) tell you that fame and riches are just around the corner, not just now today but in September 2012, March 2013, August 2014 etc etc ad infin.

Places at the very bottom of the foodchain such as the unreadable waste of time that is Stockhouse band together the losers and if anyone dare tell them anything that doesn't suit their fantasy narratives they're immediately branded "bashers" and placed on ignore.

Company IR departments are all yeah for sure it's been tough but hang in there guy, things are getting better and...you know the rest.

Et cetera, et cetera, et cetera.

And among all this jam tomorrow nonsense spewed at you by people who do not care whether you live or die, let alone make it to be rich or poor by playing the market as long as they get theirs first, there are a few small squeaky voices such as IKN* who have the temerity to inform you on the negative aspects of the junior mining world.

And if you read them and find something of use, you feel the need apologize before passing on the info.

Romarco (R.to) isn't a junior in the centre of my radar, but its story and the permitting/funding thing it's being going through have caught the corner of my eye these last few months (not least because somebody whose judgement I trust likes the thing a lot). But the company got me thinking while reading this decent Q&A with its Prez/CEO this morning. Here's an excerpt:

"So it was able to pull the trigger on a C$300 million financing, the largest in a slew of financings that came to the Canadian junior market in the past few weeks. It was well timed with an increase in the price of gold and mining equities in general. Coming at C$0.58/share it will add some 517 million shares to Romarco’s sharecount of about 725 million shares outstanding (according to TMXmoney.com). Alongside a binding $200 million debt commitment with Caterpillar, Macquarie and Societe Generale, it means Romarco has fully fund the Haile gold project as recently planned."

Anyway,go read the whole piece, it's pretty good with plenty info. Why's that interesting? Because it's good to get through a tough permitting schedule, it's good to have shown positive economics, it's very good for a junior to be able to use that magic phrase "fully funded" when talking about their project. Romarco should be congratulated for their efforts in the last three months. Meanwhile, its shareholders...

...have seen the stock drop by 20% while gold rose 5%.

The sweet smell of success has more than a hint of KY Jelly in it these days.

1/27/15

Will you please fuck off and stop visiting this blog from your promo pump rag chatroom? That goes for you too Travis you fucking idiot asswipe, and anyone stupid enough to think they're not going to get ripped off and laughed at by people who will use them for their own means, thereby remaining permanent members of the market underperformers club by using CEO CA as their chosen source of information.

After the link put up yesterday to the report on protests around the Almaden Minerals (AAU) (AMM.to) Ixtaca project in Mexico, your humble scribe got mail from the company. Even though it was originally meant as private mail, it makes a decent case and as IKN is always up for right-of-reply material, I asked for and received persmission to share this mail on the blog. So, without further ado...

I saw your reference to the Municipio article on the blog yesterday. Leticia Animas, the author, is known to us. We believe she is based out of Puebla - about 80 km from our Ixtaca project, and writes articles opposed to all kinds of development in Puebla. In this particular case, we understand that the presentation in a nearby community which she is talking about was organized by a group called REMA, which is by no means local to our project and is there more to influence the views of the community rather than to represent them. REMA appears to be an anti-development group generally with targets all over Mexico http://www.remamx.org/. The approach here seems to be REMA arriving from outside the area to try to generate fear amongst the community by alluding to deaths, skin lesions etc., while Municipio reports on the activity, mis-characterizing REMA’s action as local opposition.

For what it is worth, our experience with the local community is that they are open to dialogue and have been receptive to our work. We don't take this for granted, and continue to interact with them about any aspect of the project which is of interest. In order to help the local community visualize the impact of mining we have been offering community members bus trips to mining operations (over 300 people so far) so they can witness for themselves the impact of mining on communities and speak with those affected. This most basic form of education has been rewarding for all involved. We have an open-door community office and many employees are drawn from the local population, including several of our drillers who have been trained-up on the project and now have readily-transferable skills. We anticipate being confronted by professional NGO groups from outside of our area purporting to represent local views, and hope when that time comes that community members are enabled to take informed positions on Ixtaca.

While we have been operating in Mexico since 1992, we are a young company at heart and try to represent a modern, progressive face of mining. This business will always have critics and we welcome and expect informed criticism. I don't ask you to take our word for the community dynamics at Ixtaca, but I do hope that you read other peoples' words with the same level of scepticism that you do ours. Ideally, you could come to Ixtaca anytime to draw your own conclusions on how things are going. Barring that, I'd be happy to chat at your leisure by phone or email.

To improve your Tuesday evening, here's a 38 second clip from a kids quiz show on Chilean TV called "Pequeños Gigantes" (Little Giants), for your viewing pleasure:

The host, Carolina de Mora, asks her panel of kids "The last question in this round......Where are the thieves?" (in allusion to a famous song in Spanish by Shakira of the same name, "Dónde están los ladrones").

This is one of the shorter pieces in IKN298, out last Sunday, with more details of the problems and travails faced by Mark O'Dea and his True Gold (TGM.v) vehicle in Burkina Faso. Shockingly, it's down further this week, all while the rest of the sector has seen decent gains.

This is the stock I owned briefly in 2014, but dumped the
position at basically breakeven when they took away most of the potential
upside for shareholders by raising capital via a $100m streaming deal with
Franco Nevada (75%) and Sandstorm (25%). Today I’ll also repeat the nerves I
had (and discussed at the time) about holding a position in an exploreco in
Africa, as the political/community risk was pretty much a closed book to me and
I’ve learned the hard way not to fly blind on these matters (it’s why I largely
stick to LatAm, after all).

And that’s because of the events of the last 11 days at its
Karma project. We first noted them on the blog on the day of the violent
protests (15) and then early Tuesday morning Jan 20th (16) just
before TGM published its latest NR (17) to tell of the work stoppage, the
unknown resumption date, the $4m to $8m damage to plant and buildings and the
sacking of President/CEO Melrose at the hands of the main TGM player Mark O’Dea, who wished his ex-CEO “well in his future endeavours”. That was nice of him.

In my Tuesday post I linked to several news stories
on events and it seems there are several problems faced by TGM with locals, but
the main one, the stand-out issue (and obviously the one that ex-head Melrose
dropped the ball on) is the small matter of Islam’s most sacred mosque that
lies just next to the open pit mine plan. Last week things went into damage control
mode in the newly installed Burkina government, with the Minister of Mines and
Energy, one Emmanuel Nonyarma, trying to calm locals by telling them (18)
“...(we) assure all Muslims and particularly those of the Tidjania (directly
attached to this mosque) that nothing will happen or can happen to the mosque,
which is in a sacred and divine location”.

Unfortunately, locals aren't that easy to convince and for one
I can’t blame them. As if you check on the Karma feasibility study project area
map (page 39 of the Karma feasibility
study dated January 2014), you see the outline of the pit (red) and to the
right, those grey blotch areas. The larger of the two blotches is the town of
Ramatoulaye, with a population of around 7,000 people and home to the aforementioned
sacred mosque.

Further on in the Karma feasibility study, on page 195, we
get more information on the local religious mix and the mosque itself:

And then further on, we get to read how TGM at Karma
recognizes the potential for community problems, as during the two years when
the closest pit to the town is developed the mining will be at less than a
kilometre from the town and the mosque. Explosive charges, shovels and trucks,
dust and noise, all the things we know and love about open pit mining
operations.

Right next to Burkina’s most sacred spot for its four
million followers of Islam.

According to TGM NRs in December (19)
(20) the problems started on December 9th, at which time we were told “the Company is working to address the
concerns voiced by certain individuals in the community and expects to reach a
resolution shortly.” In January the religious heads of Islam had their 93th
conference at the mosque in Ramatoulaye. We’ve also been told that the major
earthworks were scheduled to begin in January and that first pour was planned
for end 2015. As situations go, it looks sticky from the outside and there’s
obviously been some serious community relations negligence on the part of TGM
for things to have gone sour the way they have (the probable cause for
Melrose’s sacking). Whether or not the situation is repairable at this point is
beyond my ken, but I will say that when there’s this type of confrontation in
Latin America and the main sticking point is religious and/or about sacred
sites, it’s a whole lot more complicated than just trying to throw money at a
problem until it disappears. Majaz/Tambogrande in North Peru, Esperanza in
Morelos South Mexico, the Wirikuta zone in North Mexico, there are three off
the top of my head. In a best case situation, I’d venture to say this project
just got more expensive and its timeline stretched (and obviously in a worst case
it’s simply not going to happen as a mine) and according to its streaming deal, True Gold has 20,000 oz of gold to
deliver to FNV/SAND in 2016, even if it has to buy the metal on the open market
(in fact the wording of the deal makes that clear).

Yes you guessed it, this one is an almighty “avoid” until
further notice, dirt cheap shares or not.

With its NR this morning it's managed to add "bunch of complete bullshit merchants" to "incompetent" on its curriculum vitae.

Exhibit 1: The NR from January 5th that announced, "a pipeline connecting the Rosario Mine tailings impoundment to a secondary settling pond ruptured...", which covers the incompetency bit nicely. We were told at that time that the mine was closed down and, "...(t)he Company estimates the production shutdown will be two (2) weeks." We particularly appreciated how they gave us the number in numeral and word, just so we understood.

"...it is management's expectation that the Company should be able to fulfill the above noted requirements and resume operations at the Rosario Mine in the second half of February 2015."

HuhWhatWaitSorry? To be clear, January 5th + two (2) weeks = January 19th. But January 5th + 2nd half of February = Something between 40 and 54 days. In one smooth and quick movement, SCZ tells us that the mine stoppage is set to be the triple or quadruple its in initial estimate. Oh, there's also the small matter of the Mexico authorities fining the company U$180,000 for the spill, because it wasn't SCZ's fault, y'see. Governments always fine companies large amounts of money when the company wasn't to blame.

But the best bit? Because oh yeah oh wow, there's a best bit in this morning's NR. These jokers and bullshit merchants placed a beautiful, fresh and glistening maraschino cherry on top of this particular cake when they had the temerity to include as the first words of a top paragraph:

Market players know all about certain Greek symbols such as alpha, beta, gamma and delta. Today they need to add another to the list. Less than an hour ago Alexis Tsipras was sworn in as the new Prime Minister of Greece. Once done, he left the building and walked straight to the Greek WW2 memorial site, the Kaisariani rifle range, the spot where Nazis executed 200 Greeks on 1 May 1944. In his first official act he laid flowers* on the memorial.

You get it, people? Geddit? Sinking in yet? Good.

UPDATE:And this from Reuters.More symbolism, it's coming thick and fast today. Wowsers, they couldn't even be subtle about it, could they? That took about 30 minutes from the swearing in to the ratings review. This whole thing is Argentina 2003 redux, impressive correlation.

LONDON, Jan 26 (Reuters) - Standard and Poor's sent an early warning shot to Greece's new government on Monday, saying it could downgrade its sovereign credit rating even before its next planned review date in mid-March if things go badly. continues here

*Red roses, also a symbolic move in Greece, as it's the flower associated with Aphrodite.

1/25/15

IKN298 has just been sent to subscribers. It has a gentle bouquet of fresh apples and blackberries, full bodied and plenty of interesting, long-legged tannins. A fine edition that'll really open up the sluices at both ends.

Thelatest we know, as of this Sunday morning, is that the day before his death and just before asking his work colleague Lagomarsino to lend him his pistol (the 100% confirmed weapon of death), Alberto Nisman also asked one of the police officers on protection duty around his apartment building to lend him his gun, which the officer refused to do. Nisman again used the same line, that he wanted one to carry in his car for a few days until he bought a gun for himself.

Which again nudges the evidence towards suicide, though I want to make plain as I did yesterday that there's no proof of this yet and we're talking possibles versus probables, not black versus white certainties. We shouldn't discard any hypothesis yet. But as suicide now seems more likely than it did just a few days ago when the world was quick to shout and scream and accuse the CFK government of killing an enemy, consider this:

There was some sort of emergency that got him to cut short his vacation with his daughter in Europe, hand over her charge to his ex-wife and bring him quickly back to Argentina in the days before his death.

He was due to give evidence to support his accusations against the CFK government the day after his death, but his dossier had already been deposed and opened to authorities and judiciary (its contents are now being revealed, striptease-style, to the general public). As soon as it was available (three or four days before his death) there was immediate pushback from both pro-government and (relatively) neutral bodies who spotted false information and obvious contradictions in his version of events. One that's been widely reported is how Nisman claimed he had been given key evidence about supposed intelligence officers, but in fact (and in proven fact now) those people are not and have never been members of the intelligence services.

So, let us imagine you have a less than perfect personal life. Let's also imagine you've been working under great pressure, in terms of workload and of psychological pressure from government enemies, for two years on a case you think shows major corruption in your current government (up to and including the President of your country). Let's imagine that things come to a head, you complete your work, you're satisfied with your job done, you hand in this national-level important case file...and then suddenly the whole thing blows up in your face because one of the most basic elements on which you based your argument is shown, with very little room for error, to be false. That, ladies and gentlemen, is years of work down the drain.

And on top of that, in one day's time you have to go to the nation's Congress, stand up and defend your case and reiterate your accusations when you already know that the ground has been taken from under your feet and when the opponents ask you about the contradictions, you're going to flounder and fail in front of them. And your personal life is a mess.

Anyway, that's the basic thesis for suicide here and I'm fully aware it doesn't cover all angles. For example why is there no suicide note (as either one hasn't been found as yet, or if it has we haven't been told about it)? No idea, but as suicide of this type is a wholly selfish and egocentric act, people in that mental position feel no obligation to anyone else and there doesn't have to be a note, not even to your most loved ones. I'm not saying the above is the answer to the whole thing, not at all. But it is addressed to those who say "he can't have killed himself". It's a logical and cogent possibility, like it or not.

The decent aggregating site Junior Gold Miner Seeker has chosen four video interviews from the recent Vancouver Resource 2015 bash to highlight on his blog. As one is Louis James, the sold-out chief mining scam pusher at Casey Research, there's no point in pointing you towards that one (unless you want a laugh at the blatant hypocrisy of Mr Neverwrong), but the other three are probably worth your time.

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